Federal government deficit financing may have a very great influence on monetary and credit conditions. Explain.
> 1. The U.S. government issues which of the following money market securities? a. Treasury bills b. Commercial paper c. Negotiable certificates of deposit d. Banker’s acceptances 2. Who issues commercial paper? a. U.S. government b. Business firms
> Discuss the causes of the major periods of inflation in American history.
> What was the basis for inflation during World Wars I and II?
> Describe how interest rates may adjust to an unanticipated increase in inflation.
> Discuss the early periods of inflation based on the issue of paper money.
> Describe the process by which inflation took place before modern times.
> Identify and describe the three basic theories used to explain the term structure of interest rates.
> What is the term structure of interest rates and how is it expressed?
> Describe the process of advance refunding of the federal debt.
> What have been the recent developments in the maturity distributions of marketable interest-bearing federal debt?
> Describe any significant changes in the ownership pattern of federal debt securities in recent years.
> 1. Which of the following is true for common shareholders? a. They are the firm’s creditors. b. The firm is obligated to pay them an annual dividend. c. They can vote for candidates to the firm’s board of directors. d. The dividend is a fixed percentage
> What is the tax status of income from federal securities?
> Describe the dealer system for marketable U.S. government securities.
> Explain the mechanics of issuing Treasury bills, indicating how the price of a new issue is determined.
> What is the “interest rate,” and how is it determined?
> Define personal saving.
> Compare savings surplus and savings deficit units. Indicate which economic units are generally one type or the other.
> Briefly describe the historical role of savings in the United States.
> Describe whether the federal government has been operating with surplus or deficit budgets in recent years.
> Identify the major expense categories in the federal budget.
> Identify the various sources of revenues in the federal government.
> 1. A bond that is an unsecured obligation of the issuer—in other words, there are no specific assets pledged as collateral in case the issuer cannot repay the bondholders, is called a. an equipment trust certificate. b. an indenture. c. a first mortgage
> Identify the major components of net saving and describe their relative contributions in recent years.
> What role did individuals play in the development of the 2007-09 financial crisis?
> Identify and describe the roles of several major participants in the secondary mortgage markets.
> Briefly describe credit ratings and credit scores.
> What is meant by the term securitization? What is a mortgage-backed security?
> Identify and briefly describe the two major types of residential real estate mortgages.
> What is a mortgage? What is meant by the term mortgage markets?
> Identify and briefly describe the major securities that are originated or traded in capital securities markets.
> Describe the major components of gross domestic product.
> What are the two types of financial market securities?
> 1. Is this statement correct: Eurodollar bond are issued only in Europe and are denominated in dollars? a. Yes b. No, Eurodollars bonds can be issued in any country, except the United States. c. No, Eurodollar bonds are denominated in euros. d. No, Eurod
> Explain how financial savings generated by a business are a function of its life cycle?
> What are the life cycle stages of corporations and other business firms?
> How does each stage relate to the amount and type of individual savings?
> What are the life cycle stages of individuals?
> How do economic cycle movements affect the media or types of savings by businesses?
> Describe the principal factors that influence the level of savings by individuals.
> How and why do corporations save?
> Describe the recent levels of savings rates in the United States.
> Also, differentiate between voluntary and contractual savings.
> What is capital formation?
> 1. What does it mean to “annualize a return”? a. Computer how many dollars you receive each year b. Determine the total price change during the past year c. Determine what the compounded average annual return is on an investment. d. Take 12 monthly holdi
> Trace the effect on its accounts of a loan made by a bank that has excess reserves available from new deposits.
> Why are the expansion and contraction of deposits by the banking system possible in our financial system?
> Explain how Federal Reserve notes are supported or backed in our financial system.
> Discuss the various objectives of debt management.
> Describe the effects of tax policy on monetary and credit conditions.
> Discuss how the U.S. government influences the economy and how the government responded to the 2007-09 perfect financial storm.
> Describe the relationship between policy makers, types of policies, and policy objectives.
> Why does it seem to be important to regulate and control the supply of money?
> Define the velocity of money and explain why it is important to anticipate changes in money velocity.
> 1. The “holding period” in “holding period return” refers to this length of time: a. One year. b. It always refers to how long an asset has been owned. c. Any time frame over which you’d like to know the return. d. One month. 2. The holding period retur
> Briefly describe what is meant by the money multiplier and indicate the factors that affect its magnitude or size.
> What is the difference between the monetary base and total bank reserves?
> Summarize the factors that can lead to a change in bank reserves.
> Describe the effect on bank reserves when the Federal Reserve sells U.S. government securities to a bank.
> Trace the effect on bank reserves of a change in the amount of cash held by the public.
> Explain the potential for deposit expansion when required reserves average 10 percent and $2,000 in excess reserves are deposited in the banking system.
> Explain how deposit expansion takes place in a banking system consisting of two banks.
> List and describe briefly the economic policy objectives of the nation.
> Comment on the objectives of the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA).
> Why was it considered necessary to create the Federal Reserve System when we already had the benefits of the National Banking Act?
> 1. Which is the major source of new financing for U.S corporations each year? a. bonds b. stock c. internal financing (retained earnings) d. It depends on the year. 2. Why would a U.S. firm issue bonds overseas? a. The Securities and Exchange Commission
> Briefly describe why and when thrift institutions were founded.
> How did the First Bank of the United States serve the nation? Also briefly describe why the Second Bank of the United States was chartered.
> Describe the three basic ways for processing or collecting a check in the United States.
> Describe the functions of banks and the banking system.
> Compare commercial banking with investment banking. What is universal banking?
> Define international banking. Describe how some foreign banking systems differ from the U.S. banking system.
> What were the Basel Accords and what was their purpose?
> Define and describe the following terms: common equity capital ratio, tier 1 ratio, and total capital ratio. How are these used by bank regulators?
> Describe the major financial institutions engaged in getting the savings of individuals into business firms that want to make investments to maintain and grow their firms.
> Describe what is meant by liquidity risk, credit risk, and interest rate risk.
> 1. If you wish to compound or discount quarterly (four times a year), for a period of five years, what would be the number of periodic payments (or receipts)? a. Five b. Ten c. Fifteen d. Twenty 2. The act of lending money at an excessively high in
> Describe how assets are managed in terms of a bank’s liquidity risk. Also briefly describe how liquidity management is used to help manage liquidity risk.
> What is meant by bank liquidity and bank solvency?
> What are the major asset categories for banks and identify the most important category. What are a bank’s major liabilities and stockholders’ equity and which category is the largest in size?
> Describe the structure of banks in terms of bank charters, branch banking, and bank holding companies.
> How are depositors’ funds protected today in the United States?
> Briefly describe the purpose of the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) of 1989. Also indicate the purpose of the Resolution Trust Corporation (RTC).
> Describe the reasons for the savings and loan crisis that occurred during the 1980s.
> Why was the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 passed?
> Why was the Garn–St. Germain Depository Institutions Act of 1982 thought to be necessary?
> Discuss how and why banks suffered financial difficulties during the financial crisis.
> 1. What is a loan repaid in equal payments over a specified time period called? a. Simple interest loan b. Amortized loan c. Usury loan d. All of the choices are correct. 2. For an amortized loan, the period payment contains an interest payment por
> Briefly describe the development of money, from barter to the use of precious metals.
> Describe how an individual’s net worth is determined.
> Define money and indicate the basic functions of money.
> Indicate how real assets and financial assets differ.
> Identify the major participants in the U.S. monetary system.
> Identify economic units in addition to business firms who might need funds from savers.
> Describe the three basic ways whereby money is transferred from savers to investors.
> How do surplus economic units and deficit economic units differ?
> Define money market securities and briefly describe the major types of these securities.
> What are debit cards and how are they used?
> 1. Which of the following variables is unique to solving annuity problems? a. Future value b. Interest rate c. Number of periods d. Payment 2. Assume you are the recipient of a two-year, $100 per year, ordinary annuity that has a future value of $2
> What are automatic transfer service (ATS) accounts?
